TAX 802: Income Tax (Exclusions from Gross Income)P roceeds of life insurance

- receivables of the estate unless irrevocably designated to the third party therefore taxable. In income tax, not taxable

A mount received as return of premium

- Return o f capital

- ex. Uncle mo nagpaensure, nung buhay pa siya binenta niya tapos yung bumili naman pinagpatuloy yung pag bayad ng premium para di maglapse. Namatay ngayon yung uncle sino ngayon ang tatanggap ng proceeds? Hindi yung heirs kung hindi yung bumili ng policy (TRANSFEREE). Not all the proceeds are exemptedG ifts, bequests and devises- not income but are flow of wealth

- did not use labor or capital, therefore, not income

- INCOME FROM PROPERTY DERIVED FROM ITS INVESTMENT - example, property given to you by your parents with an amount of 1,000,000. Its not an income but a flow of wealth. Binenta mo ng 1,200,000 may gain ka 200,000 therefore, taxable. - INCOME FROM ANY PROPERTY income from the property and not the property itself. Example, apartment house, yung UPA sa apartment house ireregalo namin saiyo TAXABLE INCOME. Apartment house, not taxable.

alimonyC ompensation- Capital injury

- example, friend mo nagttrabaho sa factory tapos naputulan ng daliri binigyan ng compensation for injury. NOT TAXABLE because work relatedI ncome exempt under treatment

- it is an income because of labor but we have treaty obligations

R etirement Benefits

- 10 50 rule 10 years of service not less than 50 years old to be exempted from income tax

- tax benefits can only be availed once

- there should be a private reasonable pension plan

- SEPARATION PAY

no 10-50 rule, regardless of age, regardless of service.

if initiated by employer, separation pay not taxable

If employee resigned, separation pay taxable

Physical disability must affect effectively and efficiency of the employee

M iscellaneous items

FOREIGN GOVT - Yield not subject to Philippine Income Tax ( Final Tax)

TAX 901: Fringe Benefits and Fringe Benefit Tax

g.

a.)

1. Value of the Fringe Benefit

68,000

2. Monetary Value of FB ( 68,000 * 50%) 34,000

3. GUMV

(34,000/68%)

50,000

4. FB Tax

(50,000*32%)

16,000

1. FB expense

68,000

Cash

68,000

2. FB tax expense

16,000

Cash/ AP

16,000